Members of the transforming growth factor-beta (TGF-beta) family of peptide growth factors, which include TGF-beta, bone morphogenetic proteins (BMPs) and activins, regulate a broad range of cellular processes from cell growth, differentiation to apoptosis. The signaling responses to TGF-beta and other family members are mediated by a heteromeric complex of two types of transmembrane serine/threonine kinase receptors at the cell surface, and their intracellular substrates, the Smad proteins. Following ligand binding, the type II receptor kinases phosphorylate and thereby activate the type I receptor cytoplasmic domains. The Smads then act as type I receptor-activated signaling effectors, which, following receptor-induced phosphorylation, move into the nucleus to activate transcription of a select set of target genes. The activity of Smad proteins must be tightly regulated to exert the biological effects of different ligands in a timely manner. Any deregulation of these control mechanisms may therefore alter the cellular responses to the ligands and may result in malignant disease as well as abnormal development. Several recent reports revealed that Smads undergo ubiquitin-proteasome-mediated degradation. Using a combination of yeast two-hybrid interaction assays with Smad3 as bait and EST (expressed sequence tags) database searches, we have identified Smurf2 (Smad ubiquitination regulatory factor 2), a Smurf1-related member of Hect domain E3 ligases. We demonstrate that Smurf2 interacts with receptor-regulated Smads, i.e. Smad1, Smad2 and Smad3, but not with the common mediator Smad, Smad4. Smurf2 preferentially targets Smad1 for ubiquitination and degradation, has a much weaker effect on Smad2 protein levels, but does not affect Smad3 levels at all. Increased Smurf2 levels in Xenopus embryo profoundly affects ventral mesoderm formation by decreasing Smad1 signaling. These findings suggest that Smurf2 regulates the competence of a cell and/or developing organism to respond to TGF-beta superfamily signals. In order to gain insight of the physiological role of ubiquitin-proteasome-mediated degradation of Smad, we are currently in the processing of generating both Smurf1 and Smurf2 knockout mice collaborating with Chuxia Deng (NIDDK).The different steps in Smad signaling pathway are also likely to require different proteins in the nucleus and cytoplasm that interact with Smads and in this way play important roles in their signaling pathway. Using combinational molecular and biochemical approaches, we have identified several candidate proteins that associate with different Smads. We are currently analyzing functions of these candidate proteins in the TGF-beta/Smad signal pathway.